Senate to biodiesel industry: Help is on the way

The National Biodiesel Board, the industry’s main trade group, issued a report in December that said killing the incentive would be disastrous for an industry hit hard by volatile commodity prices and weakened fuel demand caused by the economic downturn.

"Elimination of the tax credit will essentially erase all profitability in the biodiesel industry leading to a complete decline in output, expenditures, and jobs,” the report states.

Update: The bill also includes a host of other energy tax provisions, some of which overlap with the House tax extenders package approved in December.

The Senate bill includes a one-year extension through 2010 of credits for purchasing heavy-duty hybrid vehicles, producing low-sulfur diesel fuel, and building energy efficient homes, among other provisions.

The bill also closes a loophole that had allowed the paper industry to claim alternative fuel tax credits for blending small amounts of diesel with “black liquor,” which is a byproduct of turning wood into pulp.